"Firms in the non-mining economy aren't yet confident about reinvesting"
- Citi economist Josh Williamson
Australian trade balance improved significantly in February, reaching the lowest level in more than a year, as exporters received higher prices for their commodities, while imports declined. A report by the Bureau of Statistics showed that nation's trade gap shrank to a seasonally adjusted $178 million dollars in the month, down from downwardly revised deficit of $1.2 billion in the preceding month. Shipments from Australia added 3.3% overall to a seasonally adjusted A$25.64 billion, while imports dipped 0.9% in the same month. Earlier this week, the Reserve Bank of Australia kept its benchmark interest rate unchanged at the level of 3% for a third consecutive policy meeting, however, left open the prospect of further cuts should the economy struggle to growth.
"Firms in the non-mining economy aren't yet confident about reinvesting," Citi economist Josh Williamson said. "The fact that we're seeing capital imports come off, that's also in line with the general thesis that mining investment is close to peaking," he added.
"Things like household electrical items, food and beverages, textiles clothing and footwear all increased. And this could suggest that the high Aussie dollar is still actually supporting quite strong online purchases, and this could be a negative for the retail sales data which comes out tomorrow."
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